Reference: 20150505
19 February 2016
Thank you for your Official Information Act request, received on 2 December 2015.
You requested the following:
“A copy of all documents pertaining to ‘Stage 1 Business Case’ completed July
2015 and referred to on page 14 (Christchurch Central Delivery Programme) of
Treasury’s Major Projects Performance Report – March to June 2015 document.”
On 16 December 2015 we transferred to CERA responsibility for a decision on the
document ‘Stage 1 Business Case’, as this document was prepared by CERA. The
Treasury has retained responsibility for making a decision on the remainder of the
request – that is, documents relating to the Stage 1 Business Case that we have
created.
On 12 January 2016 we extended the time limit for deciding on your request by an
additional 20 working days.
Information Being Released
Please find enclosed the following documents:
Item
Date
Document Description
Decision
1
20 July 2015
Aide Memoire: Metro Sports Facility Cabinet
Paper
Release in part
2
27 July 2015
Aide Memoire: Metro Sports Facility - Revised
EGI Paper
Release in part
I have decided to release the documents listed above, subject to information being
withheld under one or more of the following sections of the Official Information Act, as
applicable:
•
advice still under consideration, section 9(2)(f)(iv) – to maintain the current
constitutional conventions protecting the confidentiality of advice tendered by
Ministers and officials
•
certain sensitive advice, under section 9(2)(g)(i) – to maintain the effective
conduct of public affairs through the free and frank expression of opinions
•
commercially sensitive information, under section 9(2)(i) – to enable … [the
Crown] to carry out commercial activities without disadvantage or prejudice, and
•
ongoing commercial negotiations, under section 9(2)(j) – to enable the Crown to
negotiate without disadvantage or prejudice.
In making my decision, I have considered the public interest considerations in section
9(1) of the Official Information Act.
Please note that this letter (with your personal details removed) and enclosed
documents may be published on the Treasury website.
This fully covers the information you requested that the Treasury is responsible for.
You have the right to ask the Ombudsman to investigate and review my decision.
Yours sincerely
Jason Webber
Manager, Investment Management and Asset Performance
2
Information Being Released
OIA 20150505
Doc 1
Doc 2
Page 1
Page 4
Doc 1
Page 1 of 8 Released
Doc 1
Page 2 of 8 Released
IN-CONFIDENCE
Recommended Facility Option
We understand that the Minister for Canterbury Earthquake Recovery favours the
“Recommended Facility” (Option B plus Diving and HPS) and has discussed the
broader scope and scale with the Mayor of Christchurch. The additional benefits of
adding diving and High Performance Sport to the Facility (Recommended option) are
not supported by Business Case analysis as they both add significant construction and
operating costs, have very low participation numbers compared to other sports and
recreation activities that can be provided for, alternative facilities are available and are
being used locally and nationally, Withheld under s9(2)(g)(i)
Withheld under s9(2)(g)(i)
Option B
9(2)(i)
Treasury recommends that you do not support Option B
though we
favour it ahead of the Minister’s Recommended Facility option. Although Option B
provides more benefits than Option C (on budget), the costs still significantly outweigh
the benefits. This option has lower Council operating costs, but these are not, in
themselves, sufficient to justify additional capital outlay by the Crown. If lower Council
operating costs are a key objective, then more work needs to be done on achieving this
at a reduced cost to the Crown.
Funding Impact of the Minister’s Recommended Option
The paper is seeking Withheld under s9(2)(i) and s9(2)(j)
to signal the Government’s commitment to the project ahead of the next stage of
market engagement.
The case for prioritising additional funding for this project ahead of others in
Christchurch has not been made.
Withheld under s9(2)(f)(iv)
Given forecast capital pressures on the Fund across the Christchurch Central
Development Programme at Budget 2015 totalled Withheld under s9(2)(i)
and across all
sectors is currently forecast at around 9(2)(i)
we consider that additional Crown
funding for this Facility should not be a priority ahead of other projects in Christchurch
that may generate more economic and social benefits, such as the Convention Centre
or Accessible City Phase II, and for which final decisions on scope, scale and cost are
yet to be made.
You may wish to seek a report back from the Minister for Canterbury Earthquake
Recovery on future pressures, prioritisation of projects and associated fiscal risk in
Christchurch prior to further decisions being taken on Crown contributions to the
Central City Development Programme.
.Treasury:3246191v1
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Doc 1
Page 3 of 8 Released
.IN-CONFIDENCE
Impact on Establishment of “Regenerate Christchurch”
There are pros and cons of making decisions regarding the scope and scale of the
Metro Sports Facility ahead of decisions on Regenerate Christchurch and on any
refresh of the Recovery Strategy and Cost Sharing Agreement. Treasury’s judgement
is that decisions on the scope and scale of the MSF should be made now to signal
Government’s commitment to the rebuild and allow the next steps of the project to
proceed.
Risk
We consider that all options for this Facility pose a significant fiscal risk for the Crown,
with this risk increasing with the complexity of the project. We are not yet comfortable
that the financial implications are fully understood, and do not have a high level of
assurance that there is sufficient mitigation of financial risk. Risks include:
•
Council funding for the Facility is fixed in the Cost Sharing Agreement (and
associated clarifications) at 9(2)(j)
in nominal dollars.
Withheld under s9(2)(j)
and the portion of
funding designated as "to be confirmed" in the Cost Sharing Agreement,
•
•
Withheld under s9(2)(i) and s9(2)(j)
Risks and cost issues arising from the procurement process.
Hilary Blake, Senior Analyst, Fiscal and State Sector Management, 04 917 6168
Elizabeth Scurr, Team Leader, Fiscal and State Sector Management, 04 917 6190
Treasury:3246191v1
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Doc 2
Page 4 of 8 Released
Doc 2
Page 5 of 8 Released
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WIthheld under s9(2)(i)
We note that ECI has a range of definitions in the market, including between Australia
and New Zealand and additional time may be required to ensure market understanding
of the specific process WIthheld under s9(2)(i)
, 9(2)(g)(i)
Withheld under s9(2)(g)(i)
Impact on CDHB Rebuild
If the commencement of the Metro Sports Facility development is scheduled before
9(2)(i)
2018, it is likely to coincide with the peak-build period of the
CDHB Acute
Services Block. This rebuild is forecast to be completed by December 2017, with
related supporting developments such as the Outpatients building to be completed in
advance. The hospital rebuild has been prioritised and the Metro Sports site is an
integral part of the hospital rebuild spatial management. Any conflict needs to be
actively managed. We recommend that Recommendation 16 include a formal
requirement to take into account any impacts on the Hospital redevelopment
programme, and that any decision to expedite the Metro Sports Facility
development include consultation with the Minister of Health.
ECI-based Procurement Models
WIthheld under s9(2)(i)
Under a Traditional ECI model the
contractor is appointed on capability rather than price, which is determined after the
contractor is selected. WIthheld under s9(2)(i)
WIthheld under s9(2)(i)
Withheld under s9(2)(j)
9(2)(j)
WIthheld under s9(2)(i)
WIthheld under s9(2)(i)
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Withheld under s9(2)(i)
Hilary Blake, Senior Analyst, Fiscal and State Sector Management, 04 917 6168
Elizabeth Scurr, Team Leader, Fiscal and State Sector Management, 04 917 6190
Treasury:3249923v1
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Doc 2
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DEVELOPMENT OPTION FOR THE METRO SPORTS FACILITY: ALTERNATE
RECOMMENDATIONS
Replace Recommendation 6:
6.
agree that, in relation to the proposal for the Metro Sports Facility, which
meets the Christchurch Central Recovery Plan objectives:
EITHER
6.1
6.2
agree to the development of the Recommended Facility at a
project cost of s9(2)(i)
including land, with a total
Crown contribution ofs9(2)(i)
and
approve the establishment of a new Metro Sports Facility
to provide for the
additional Crown contribution for the Recommended Facility
costs and be a pre-commitment against the Future Investment
Fund for Budget 16;
Withheld under s9(2)(j)
OR (Treasury supported option)
6.3
agree to the development of Option B at a project cost of
including land with a total Crown contribution of
s9(2)(i)
and
s9(2)(i)
6.4 approve the establishment of a new Metro Sports Facility
Withheld under s9(2)(j)
to provide for the Crown
contribution for Option B costs and be a pre-commitment against
the Future Investment Fund for Budget 16;
OR
6.5
6.2
agree to the development of the option endorsed by the Metro
Sports Facility Single Stage Business Case at a project cost of
s9(2)(i)
including land, with a total Crown contribution
of s9(2)(i)
and
approve the establishment of a new Metro Sports Facility
to provide for the
additional Crown contribution for the option endorsed by the
Metro Sports Facility Single Stage Business Case costs and be
a pre-commitment against the Future Investment Fund for
Budget 16;
Withheld under s9(2)(j)
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Replace Recommendations 8 and 9
8.
9.
Withheld under s9(2)(j)
direct the Minister for Canterbury Earthquake Recovery to report to
Cabinet in November 2015 and provide market engagement feedback
and seek Cabinet approval of end ownership options;
Recommendation 16 to include
16 ...........that any decision to expedite the Metro Sports Facility development
include consultation with the Minister of Health on any impacts on the
Christchurch District Health Board redevelopment programme.
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